WINA Winmark Corporation

Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended March 30, 2024 of $8,819,000 or $2.41 per share diluted compared to net income of $8,942,700 or $2.49 per share diluted in 2023. Results during the quarter were impacted by the Company’s decision in May 2021 to run-off its leasing portfolio

“Performance during the first quarter was adequate,” commented Brett D. Heffes, Chair and Chief Executive Officer.

Winmark - the Resale Company®, is a nationally recognized franchisor focused on sustainability and small business formation. We champion and guide entrepreneurs interested in operating one of our award winning resale franchises: Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. At March 30, 2024, there were 1,327 franchises in operation and over 2,800 available territories. An additional 73 franchises have been awarded but are not open.

This press release contains forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to future events or the future financial performance of the Company. Such forward-looking statements are only predictions or statements of intention subject to risks and uncertainties and actual events or results could differ materially from those anticipated. Because actual result may differ, shareholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements.

 

WINMARK CORPORATION

CONDENSED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

March 30, 2024

 

December 30, 2023

ASSETS

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

22,872,200

 

 

$

13,361,500

 

Restricted cash

 

 

—

 

 

 

25,000

 

Receivables, net

 

 

1,688,600

 

 

 

1,475,300

 

Net investment in leases - current

 

 

34,100

 

 

 

75,100

 

Income tax receivable

 

 

—

 

 

 

31,400

 

Inventories

 

 

420,900

 

 

 

386,100

 

Prepaid expenses

 

 

1,265,600

 

 

 

1,392,100

 

Total current assets

 

 

26,281,400

 

 

 

16,746,500

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

1,649,400

 

 

 

1,669,800

 

Operating lease right of use asset

 

 

2,351,700

 

 

 

2,425,900

 

Intangible assets, net

 

 

2,905,800

 

 

 

2,994,300

 

Goodwill

 

 

607,500

 

 

 

607,500

 

Other assets

 

 

487,800

 

 

 

471,300

 

Deferred income taxes

 

 

4,052,400

 

 

 

4,052,400

 

 

 

$

38,336,000

 

 

$

28,967,700

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:

 

 

 

 

 

 

Notes payable, net

 

$

4,217,900

 

 

$

4,217,900

 

Accounts payable

 

 

1,296,300

 

 

 

1,719,400

 

Income tax payable

 

 

2,469,000

 

 

 

—

 

Accrued liabilities

 

 

4,734,000

 

 

 

2,858,200

 

Deferred revenue

 

 

1,657,300

 

 

 

1,666,100

 

Total current liabilities

 

 

14,374,500

 

 

 

10,461,600

 

Long-Term Liabilities:

 

 

 

 

 

 

Line of credit/Term loan

 

 

30,000,000

 

 

 

30,000,000

 

Notes payable, net

 

 

33,794,300

 

 

 

34,848,800

 

Deferred revenue

 

 

7,744,400

 

 

 

7,657,500

 

Operating lease liabilities

 

 

3,566,600

 

 

 

3,715,800

 

Other liabilities

 

 

1,435,300

 

 

 

1,440,100

 

Total long-term liabilities

 

 

76,540,600

 

 

 

77,662,200

 

Shareholders’ Equity (Deficit):

 

 

 

 

 

 

Common stock, no par, 10,000,000 shares authorized, 3,4997,430 and 3,496,977 shares issued and outstanding

 

 

8,324,700

 

 

 

7,768,800

 

Retained earnings (accumulated deficit)

 

 

(60,903,800

)

 

 

(66,924,900

)

Total shareholders’ equity (deficit)

 

 

(52,579,100

)

 

 

(59,156,100

)

 

 

$

38,336,000

 

 

$

28,967,700

 

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

 

March 30, 2024

 

April 1, 2023

Revenue:

 

 

 

 

Royalties

 

$

17,268,700

 

 

$

16,747,700

 

Leasing income

 

 

836,800

 

 

 

1,637,000

 

Merchandise sales

 

 

1,110,500

 

 

 

1,276,000

 

Franchise fees

 

 

364,500

 

 

 

378,200

 

Other

 

 

529,000

 

 

 

484,700

 

Total revenue

 

 

20,109,500

 

 

 

20,523,600

 

Cost of merchandise sold

 

 

1,038,900

 

 

 

1,187,300

 

Leasing expense

 

 

36,600

 

 

 

316,400

 

Provision for credit losses

 

 

(1,500

)

 

 

(4,600

)

Selling, general and administrative expenses

 

 

6,817,300

 

 

 

6,636,100

 

Income from operations

 

 

12,218,200

 

 

 

12,388,400

 

Interest expense

 

 

(737,700

)

 

 

(797,600

)

Interest and other income

 

 

187,900

 

 

 

125,700

 

Income before income taxes

 

 

11,668,400

 

 

 

11,716,500

 

Provision for income taxes

 

 

(2,849,400

)

 

 

(2,773,800

)

Net income

 

$

8,819,000

 

 

$

8,942,700

 

Earnings per share - basic

 

$

2.52

 

 

$

2.58

 

Earnings per share - diluted

 

$

2.41

 

 

$

2.49

 

Weighted average shares outstanding - basic

 

 

3,497,261

 

 

 

3,460,720

 

Weighted average shares outstanding - diluted

 

 

3,661,367

 

 

 

3,594,234

 

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 30, 2024

 

April 1, 2023

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income

 

$

8,819,000

 

 

$

8,942,700

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation of property and equipment

 

 

108,300

 

 

 

104,000

 

 

Amortization of intangible assets

 

 

88,500

 

 

 

88,500

 

 

Provision for credit losses

 

 

(1,500

)

 

 

(4,600

)

 

Compensation expense related to stock options

 

 

485,900

 

 

 

475,900

 

 

Deferred income taxes

 

 

—

 

 

 

24,200

 

 

Operating lease right of use asset amortization

 

 

74,200

 

 

 

66,900

 

 

Tax benefits on exercised stock options

 

 

—

 

 

 

77,700

 

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables

 

 

(213,300

)

 

 

(143,200

)

 

Principal collections on lease receivables

 

 

62,300

 

 

 

423,800

 

 

Income tax receivable/payable

 

 

2,500,400

 

 

 

2,490,900

 

 

Inventories

 

 

(34,800

)

 

 

356,300

 

 

Prepaid expenses

 

 

126,500

 

 

 

422,400

 

 

Other assets

 

 

(16,600

)

 

 

(40,400

)

 

Accounts payable

 

 

(423,100

)

 

 

(678,300

)

 

Accrued and other liabilities

 

 

1,729,800

 

 

 

1,140,200

 

 

Rents received in advance and security deposits

 

 

(19,700

)

 

 

(194,200

)

 

Deferred revenue

 

 

78,100

 

 

 

297,700

 

 

Net cash provided by operating activities

 

 

13,364,000

 

 

 

13,850,500

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(87,900

)

 

 

(5,500

)

 

Net cash used for investing activities

 

 

(87,900

)

 

 

(5,500

)

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Payments on notes payable

 

 

(1,062,500

)

 

 

(1,062,500

)

 

Proceeds from exercises of stock options

 

 

70,000

 

 

 

590,400

 

 

Dividends paid

 

 

(2,797,900

)

 

 

(2,421,900

)

 

Net cash used for financing activities

 

 

(3,790,400

)

 

 

(2,894,000

)

 

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

9,485,700

 

 

 

10,951,000

 

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

13,386,500

 

 

 

13,680,600

 

 

Cash, cash equivalents and restricted cash, end of period

 

$

22,872,200

 

 

$

24,631,600

 

 

SUPPLEMENTAL DISCLOSURES:

 

 

 

 

 

 

 

Cash paid for interest

 

$

725,700

 

 

$

791,500

 

 

Cash paid for income taxes

 

$

349,100

 

 

$

181,200

 

 

 

 

 

 

 

 

 

 

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Balance Sheets to the total of the same amounts shown above:

 

 

Three Months Ended

 

 

 

March 30, 2024

 

April 1, 2023

 

Cash and cash equivalents

 

$

22,872,200

 

 

$

24,551,600

 

 

Restricted cash

 

 

—

 

 

 

80,000

 

 

Total cash, cash equivalents and restricted cash

 

$

22,872,200

 

 

$

24,631,600

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240416444706/en/

Anthony D. Ishaug 763/520-8500